In a joint venture with property investment adviser Nice Capital, London-based investment manager Arch Financial Products has launched a residential fund to capitalise on falling UK house prices caused by the credit crunch and the general economic downturn.

The Guernsey-domiciled fund, Nice Residential III IC, will purchase below market value properties that become available in the current stressed markets and in particular properties offered by distressed sellers.

Returns will be maximised through conversions and multi-letting the properties, and the fund aims to return more than 15 per cent net of fees annually over a five-year period, with an annual volatility target of 5 per cent.

The fund has a minimum investment of GBP50,000 and will target absolute returns from a diverse range of real estate investment opportunities, focusing on emerging London locations with lower purchase values and higher yields, as well as areas earmarked for planned transport infrastructure investment and regeneration projects. The target locations are concentrated on London Underground zones 2 and 3.

The fund is available to private and corporate investors and is targeting an initial launch of around GBP20m. There is an institutional class with a minimum investment of GBP500,000, and shares will be available in euros and US dollars subject to demand.

'It's a counter-cyclical, opportunistic fund,' says Nice Capital chief executive Martin Skinner. 'We can make excellent returns by purchasing property at levels below market value due to markets under stress, and it is an opportunity to make those returns at a time when other strategies are faltering.

'Individual and corporate investors can access the benefit of expert fund investment for an investment of as little as GBP50,000. The diversification they will get through a well-managed property fund vehicle will provide better insulation against market risk than buying individual properties directly.'

Established in 2002, Arch Financial Products is an investment management group providing specialist asset management and structured investment products and services to both retail and institutional investors. The firm has more than 50 investment partners and staff and manages nearly USD2bn in a wide range of alternative asset classes, strategies and themes including private equity, private finance, sustainable and environmental themes, natural resources, energy, real estate and regional investments such as China and Africa.

Nice Capital currently manages more than GBP200m in assets, including residential developments in the UK and Germany. Its affiliate company Nice Group offers property asset management services including property acquisition, planning, design and construction, letting and property management.

       

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